Norfolk W. Ry. Co. v. Bank Tr. Co. , 37 Ohio App. 323 ( 1930 )

This case comes into this court on error from the court of common pleas of Hamilton county, wherein judgment was rendered for the plaintiff, the Cosmopolitan Bank Trust Company, against the defendant, the Norfolk Western Railway Company.

The petition contained seven causes of action, all of which were identical, with the exception of dates, amounts, and numbers.

The first cause of action is as follows:

"Plaintiff says that on the 28th day of December, 1921, at Cincinnati, Ohio, the defendant issued to D.O. Cross Company its bill of lading covering a car of grain, in Lake Erie Western Car, No. 11711, destined to Smith-Pearce Brokerage Co., Spartanburg, S.C.

"On said day the said D.O. Cross Company in regular course of business borrowed from this plaintiff the sum of $550.00 upon said property, depositing with this plaintiff said original bill of lading, covering said shipment as security for said loan. The said D.O. Cross Company has never paid said sum, and the same is due this plaintiff with interest from the 28th day of December, 1921.

"Said bill of lading contained a provision that `the surrender of this original order bill of lading properly endorsed shall be required before the delivery of the property.'

"Plaintiff says that notwithstanding said agreement in said bill of lading, the defendant delivered said car with its contents, without requiring the production of the original bill of lading and plaintiff thereby was damaged in said sum of $550.00, with interest. A copy of said bill of lading marked `Exhibit A' is attached hereto and made part of this petition."

The issues were made up by the amended answer of the railway company and the reply of the bank.

In the amended answer the railway company admitted the issuance of the bills of lading containing the allegation as alleged, that its connecting carrier delivered the car and the contents thereof without requiring the surrender of the original bills, and denied all other allegations.

As a first defense to all the causes of action the railway company alleged that the bills of lading sued upon contained the following clause:

"Claims for loss, damage, or injury to property must be made in writing to the originating or delivering carrier or carriers issuing this bill of lading within six months after delivery of the property, or, in case of failure to make delivery, then within six months after a reasonable time has elapsed; provided that if such loss, damage, or injury was due to delay or damage while being loaded or unloaded, or damaged in transit by carelessness or negligence, then no notice of claim nor filing of claim shall be required as a condition precedent to recovery."

And the railway company alleged further in its first defense that the bank did not give notice in writing or file a claim within six months, as provided in this section of the bill of lading.

As a second defense, the railway company alleged that the bills of lading contained the following section:

"Suits for loss, damage, injury or delay shall be instituted only within two years and one day after delivery of the property, or in case of failure to make delivery, then within two years and one day after a reasonable time has elapsed."

And it alleged further that suit was not filed within two years and a day from the delivery dates alleged in the amended answer.

The amended answer contained other defenses which were abandoned.

The reply was a general denial.

The facts are that the railway company issued to the D.O. Cross Company, at Cincinnati, Ohio, seven order bills of lading on December 14, 16, 20, and 22, 1921, the consignor and consignee being the same and the bills requiring notice being given to the Smith-Pearce Brokerage Company, at Spartanburg, S.C., the destination of the shipments of hay covered by the bills.

Upon the dates of issuance of the bills the consignor deposited same in the Cosmopolitan Bank Trust Company of Cincinnati, as security for the payment of drafts, the bills of lading being indorsed in blank by the consignor. The drafts were drawn upon the Smith-Pearce Brokerage Company, at Greenville, S.C., payable to the order of the bank.

The bank officials testified that the bills of lading were negotiated as security for the loans, and a portion of the answer filed by the railway company was introduced in evidence, and is as follows:

"That the said The D.O. Cross Company, Consignor, borrowed from the plaintiff certain sums of money, depositing with the plaintiff the said several bills of lading as security for the said several loans."

The shipments arrived at Spartanburg, S.C., on December 22, 26, and 28, 1921, and January 7, 1922, and, upon the request of the consignor-consignee, were reconsigned to various other consignees by the railway company, without requiring the surrender of the bills of lading.

Some four or five weeks after these reconsignments, the drafts, with the bills of lading attached, were returned by the bank's correspondent at Spartanburg, S.C., and a memorandum direction also attached to each draft and bill of lading bore the pencil inscriptions, "This will be R.R. Claim," or, "Reshipped R.R. Claim."

An officer of the bank testified as follows:

"Q. Now all of these drafts were sent through what bank for collections? A. I do not remember that unless we see the memorandums —

"Q. That is, all you know is what your memoranda show? A. Yes, to the Spartanburg Bank, and I think there was another bank.

"Q. I notice on this memorandum you presented in testimony, the word `reshipped' on it, what does that mean? A. `Reshipped?'

"Q. Yes. A. I was told that he had them reshipped down there without asking for our bill of lading by our secretary at that time.

"Q. Who had them reshipped? A. I don't know, that is what we found out.

"Q. That they were reshipped? A. Yes.

"Q. By whom? A. By Cross.

"Q. In other words you knew that they were reconsigned by the D.O. Cross Company? A. Not until after we found out they were not paid.

"Q. You found out they were not paid within four or five weeks at the utmost? A. Something like that I suppose.

"Q. Or even a shorter time it might be? A. It could be, yes.

"Q. You would not allow your drafts to stay down there a month without inquiring about them? A. We follow it up, yes.

"Q. So that you would know pretty soon if they were not paid why they were not paid and get them back would you? A. Yes."

On October 18, 1922, an attorney for the bank wrote a letter to the attorney for the connecting carrier, asking for copies of the bills of lading involved in the shipments of hay, but making no claim for compensation for loss of shipments.

On July 24, 1923, claim was made by the bank in a letter to the railway company.

On July 26, 1923, the bank was advised, for the railway, that when a claim was properly presented it would pass upon the claims.

The bills of lading included a clause substantially as alleged by the railway company in its amended answer, as follows:

"Claims must be made in writing to the originating or delivering carrier within six months after delivery of the property (or, in case of export traffic, within nine months after delivery at port of export) or, in case of failure to make delivery, then within six months (or nine months in case of export traffic) after a reasonable time for delivery has elapsed: Provided that if the loss, damage or injury was due to delay or damage while being loaded or unloaded, or damage in transit by carelessness or negligence, then no notice of claim nor filing of claims shall be required as a condition precedent to recovery. Suits for loss, damage or injury shall be instituted not later than two years and one day after the day on which notice in writing is given by the carrier to the claimant that the carrier has disallowed the claim or any part or parts thereof, specified in the notice. Where claims for loss, damage or delay are not filed, or suits are not instituted thereon, in accordance with the foregoing provisions, the carrier will not be liable and such claims will not be paid."

A request for an instructed verdict in favor of the railway company was made and refused.

The case was submitted to the jury, which returned a verdict in favor of the bank.

It is claimed that a verdict should have been instructed as requested, because there was no evidence showing: First, that a claim was filed within the time specified in the bill of lading contract; and, second, that the suit was filed within time specified in the bill of lading contract.

It has been held repeatedly that misdelivery of a shipment by a carrier amounts to a conversion. However, as the instant suit is predicated upon a violation of the contract with the railway company, it is unnecessary to consider the case from this viewpoint.

The bank brings suit upon a contract which is embodied in the order form of bill of lading, introduced in evidence, and claims that the railway company has violated its obligation to the bank in failing to perform a duty set out in one of the clauses of this contract, as quoted in the petition. The bank, however, was equally bound by all other clauses in the contract, not changed by law.

It has been held that misdelivery is a "failure to make delivery" within the terms of the contract. Georgia, Fla. Ala.Ry. Co. v. Blish Milling Co., 241 U.S. 191, 36 S. Ct., 541,60 L. Ed., 948.

It was held in the case of Davis, Dir. Genl., v. John L. RoperLumber Co., 269 U.S. 158, 46 S. Ct., 28, 70 L. Ed., 209, 44 A.L.R., 1357:

"A loss due to misdelivery of a shipment by the carrier is not included, as damage `in transit' or otherwise, within the classes of cases mentioned in the second proviso of the first Cummins Amendment [Title 49, Section 20, U.S. Code], as to which classes it provides that no notice of claim nor filing of claim shall be required as a condition precedent to recovery."

It was also held in the Roper Lumber Co. case that misdelivery is not excluded from the effect of the notice of claim clause in a bill of lading:

"Section 10 of the Bills of Lading Act [Title 49, Section 90, U.S. Code], which declares that a carrier delivering goods to any one not lawfully entitled to their possession shall be liable to any one having a right of property or possession in the goods, etc., does not excuse a shipper, whose goods were misdelivered, from compliance with a stipulation of his bill of lading relieving the carrier from liability if claim were not made within six months after a reasonable time for delivery had elapsed."

The bank, from its own testimony, as previously quoted, knew after the lapse of five weeks from the date of shipments that the goods had been reshipped, and that there was a misdelivery, and by the terms of the contract with the railway company it was bound to make its claims within six months from this date, for "a reasonable time for delivery had elapsed" when the bank had knowledge of the misdelivery. It was held in the case of Davis,Agt., v. Oswald Taube, 113 Ohio St. 499, 149 N.E. 861, that the time for filing claims runs from the time the shipper has knowledge of the failure to deliver. When knowledge is shown, the question of notice by the railway, or whether a reasonable time for delivery has elapsed, is of no consequence.

The fact that the bills of lading were negotiated with the bank cannot relieve it of a clause binding upon the shipper when it is relying upon the contract of the railway company with the shipper for its own benefit in asserting responsibilty of the railway company for misdelivery.

It is strenuously urged that the notations on the memorandum attached to the drafts and bills of lading were sufficient evidence to justify the jury in its verdict, and constituted proof that a claim in writing was made to the railway company. We find no scintilla of evidence in the record justifying such a construction of these notations, or that the railway company ever knew of them; nor is there any evidence in the record indicating that notice or claim was filed by the bank, or any one for it, with the railway company, previous to the 24th of July, 1923, long after the period provided in the bills of lading for the filing of claims had expired. The bank had knowledge of the misdelivery not later than five weeks (giving it full advantage of its own evidence) after January 7, 1922, or about the 16th of February, 1922. The claim was not made for over a year; that is, July 24, 1923.

As to the second defense, that the suit was not filed within the time provided for in the bill of lading contract, the railway company must fail, for it is held in Louisiana Western Rd. Co. v. Gardiner, 273 U.S. 280, 47 S. Ct., 386, 71 L. Ed., 644, as follows:

"2. A provision in an interstate bill of lading attempting to restrict the institution of damage suits to two years and one day after delivery of the property is bad under Transportation Act 1920 [Title 49, Section 20, paragraph 11, U.S. Code], which declares unlawful any limitation shorter than two years from the day when notice in writing is given by the carrier to the claimant that the carrier has disallowed the claim or any part or parts thereof specified in the notice.

"3. Neither the Cummins Amendment nor the Transportation Act operates, itself, as a statute of limitation upon a suit by a shipper against a carrier for damage to goods.

"4. In the absence of a federal statute of limitations the local one is applicable to such actions."

Suit was filed within two years from the refusal of the claim, if the letter of July 26, 1923, can be considered a refusal. By the terms of this letter, the railway company advised the bank that it would consider and pass upon the claim, if properly presented. In either event, whether it was a refusal or not, the railway company would fail on this defense, for if it was not a refusal it was necessary that the claim be denied before the period of two years and one day, mentioned in the bill of lading contract should commence to run.

For the reasons given, the request for an instructed verdict in favor of the railway company should have been granted.

The judgment of the court of common pleas is reversed, and judgment will be entered here in favor of the plaintiff in error.

Judgment reversed and judgment for plaintiff in error.

CUSHING, P.J., and HAMILTON, J., concur.